The 111th Congress once again left patent reform efforts on the table without any resolution or even a vote. That might be just as well given that in the minds of most the patent reform efforts were not truly “reform,” but rather were merely changes that would not have made for a stronger Patent Office or otherwise addressed some of the pressing issues that require Congressional attention.
At some point during 2011, however, I suspect that Congress will become engaged and interested as innovators find themselves on the short end of the Supreme Court sick in the Microsoft v. i4i case. We all know that the Supreme Court only takes patent cases to overrule or at least modify the law of the Federal Circuit. That only makes sense since there is but one Circuit responsible for patent law, thus no splits among the Circuits to resolve. So in taking the Microsoft-i4i case that asks whether there should be as broad a presumption of validity as required under the well-established law of the Federal Circuit, it doesn’t take a rocket scientist to figure out that the presumption of validity will be eroded by the Supreme Court, perhaps in this term. That being the case, it is at least plausible that Congress could be persuaded to become involved, perhaps even undertaking sensible reforms that protect innovators. Yes, I realize how naive that sounds, but please keep reading!
Not to be deterred by realities, I offer the following suggestions. Realistically, I understand full well that it is unlikely that Congress will bother themselves with reform efforts that are sensible, at least at the moment. It is also unlikely that innovators will be adequately represented in any reform efforts once they do arise. It seems that the power structure in Washington, D.C. believes that the term “innovator” and “big business” are synonymous, which surely they are not. It is also unlikely the Senate will move beyond the legislation Senator Leahy wants so badly but can’t seem to move. Thus, if we really want sensible reform that actually raises up the Patent Office and guarantees the value of patents for innovators we need to be ever vigilant.
1. Permanent Injunctions
Permanent injunctions are those that are awarded after a patent owner has gone through an entire trial, all validity arguments and other defenses have failed, the claims have been adjudicated to not be invalid (awkward way to say it, but legally how it is said because claims start off presumed valid) and one or more claims have been infringed. In 2006 the United States Supreme Court decided that ordinary equity principles should apply and patent cases are not any different than any other case. See The Roberts Supreme Court: Pro-Business and Anti-Patent? Factually and legally this is an incorrect view by the Supreme Court.
A patent for an invention is the grant of a property right to the owner and issued by the United States Patent and Trademark Office. The right conferred by the patent grant is, in the language of the statute and of the grant itself, “the right to exclude others from making, using, offering for sale, or selling” the invention in the U.S. or “importing” the invention into the U.S. In order to obtain a patent in the United States it is necessary to file a US patent application. Thus, it is not accurate to say, imply or pretend that patent cases are or should be lumped together with all other cases in terms of equity.
Even copyrights, which themselves offer exclusivity, are not nearly the right conferred by patents. Copyright exclusivity suffers from fair use and independent creation, which means that a copyright offers a very different level of exclusivity. Patents offer a near absolute exclusivity, at least once the patent claims are determined to be valid and the claims infringed. Thus, an injunction should ordinarily be issued as a matter of right. That is what is demanded by the grant itself, which promises exclusivity. Exactly what situation would there be a better argument for a permanent injunction when the full force of the United States federal government has conferred onto the owner “the right to exclude others”?
The operative statute in the patent world is 35 U.S.C. 283, which says:
The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.
Section 283 should be amended to read:
(a) Preliminary Injunctions. The several courts having jurisdiction of cases under this title may grant preliminary injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.
(b) Permanent Injunctions. Upon the finding that one or more patent claims are infringed and that no defenses to infringement are available to the infringer, the several courts having jurisdiction of cases under this title
mayshall grant a permanent injunction s in accordance with the principles of equityto the patent owner to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.
There will be those who will undoubtedly protest vehemently, but in order for those protesting to be intellectually honest they must protest the very existence of a patent. Issuing permanent injunctions to prevailing patent owners is nothing more than a federal district court reiterating what the United States Congress articulated as their desire. Yes, Congress choose to make the patent right exclusive in nature and choose not to introduce fair use, so it is an absolute exclusiveness. So why in the name of common sense shouldn’t an injunction from a district court issue as a matter of right to a victorious patent owner? Does comity between co-equal branches of government mean nothing to the Supreme Court?
2. Quid Pro Quo – More Rights for Innovators
It is impossible not to notice that the Supreme Court is little by little eroding the value of a patent, and they are likely to do the nearly unthinkable when the issue a decision in Microsoft v. i4i, which is alter 30 years of well-established law and chip away at the presumption of validity for a patent. That might be viewed by some as “pro business” but it is certainly anti-innovator. The big businesses are crying that they cannot do business because they are getting sued left and right by patent owners. What they fail to point out, however, is that they lose frequently. Perhaps they should try and win a lawsuit here and there before they decry the litigation they face.
In any event, big business does not want independent inventors, small businesses or well funded start-ups to enjoy strong patent protection because that threatens their dominance. It really is just that simple. So they want patents to become weaker, and what better way than to chip away at the presumption of validity?
At some point in time Congress will need to step in and decide whether they really meant for patent to be considered a property right. They have been a property right since the first Patent Act back in 1790, but they are losing some of the indicia of property. At some point in time a property right needs to be settled, otherwise it isn’t a true ownership of property, but rather is more like a weak license or weak form of permission. Essentially, if patents lose a strong presumption of validity and already don’t enjoy a right to an injunction, a patent then becomes akin to a property right in a communist regime — yours until we or someone else decides it is not yours. What we know is that in this type of property right regime property value is not maximized, which would be tragic given that we all know that innovation leads to job creation. Even our elected politicians know they have to have pro-innovation policies, although they don’t always seem to understand the rhetoric they speak.
What Congress needs to do is establish a procedure for quieting title to patents. At some point in time a patent needs to be owned and not susceptible to challenge, at least if we want to maximize investment which will in turn maximize job creation. Luckily there is already an analogous procedure at the United States Patent and Trademark Office on the Trademark side of the building. If a trademark owner files for incontestable status between the 5th and 6th year of ownership a trademark becomes incontestable. The name is a bit misleading. The propriety of the trademark can still be challenged in court, but only for the most egregious wrongs. Something similar should be adopted for patents.
It is time to realize that a patent that can be challenged for any reason, whenever it is convenient, is not in the best interest of innovators. These innovators are job creators, we all know that to be true. So at some point in time if a patent has not been challenged through Reexamination or in the federal courts, it needs to have its ownership and associated property rights settled. Trademarks can last forever, patents last for at most 20 years from the date of filing, which typically creates a useful life of no more than 17 years, usually much less. Thus, I would propose that if a patent hasn’t been challenged with 3 years after issuance it is eligible for incontestable status. What that would mean is that the patent could no longer be challenged for obviousness. It might mean other things, but at a minimum obviousness needs to be off the table. That is the biggest fear for patent owners, particularly given that the Supreme Court has turned the meaning of obviousness into a moving target; a question of “common sense.” Too bad they didn’t tell us what that means.
3. Reform of Obviousness
In 1952 the United States Congress set out to recodify the patent laws, and did so by codifying into law the cases they thought made sense and specifically adding language into the statute that excised the rulings of the courts that didn’t make sense. No place was the excising of ridiculous rulings more pronounced than with respect to obviousness.
The law of the land had morphed into one where an invention had to exhibit some “flash of creative genius” in order to be entitled to a patent. What that essentially meant was that advances were not patentable, only paradigm shifts were patentable. Such a rule made little or nothing patentable, and actually thwarted the entire Constitutional foundation of the patent system. The patent system is supposed to foster advancement. When advancement is only rewarded for paradigm shifting inventions there is very little incentive to try and improve what already exists because if you do you wouldn’t be able to protect it and any monies you spend in R&D would be lost forever given that competitors could simply copy your invention right away, only they wouldn’t have to charge an R&D premium, so they could sell YOUR invention for less.
Unfortunately, the “common sense” test for obviousness announced by the Supreme Court in KSR v. Teleflex takes us essentially back to the “flash of creative genius” standard. It is no stretch to observe that under a strict reading of the ruling in KSR an inventor who sets out to accomplish something is not entitled to a patent if he or she actually accomplishes the objective. Thus, under a strict reading of KSR only an inventor who accidentally stumbles across something exhibits the requisite eureka moment sufficient to satisfy the Supreme Court. So the KSR test is actually more restrictive than the “flash of creative genius” standard. Luckily, the Patent Office and lower courts have worked with some success to ameliorate the ridiculous approach to obviousness. But those 9 who believe they know everything about everything, particularly the nuances of patent law, lurk.
Congress should once and for all reassert its dominance here. They specifically chose this language in 1952 to get away from “flash of creative genius”:
Patentability shall not be negatived by the manner in which the invention was made.
As you can see, the only wan the Supreme Court could have reached its decision in KSR was to ignore that sentence. Had they read the statute they would have known the nebulous “common sense” test they announced, which focuses on the manner in which the invention is conceived and reduced to practice, violates the express terms of 35 U.S.C. 103 under any fair reading.
I have only half jokingly in the past explained that Congress should modify 103 and simply underline that sentence and then add into the Legislative History a statement that says that it was underlined to make clear that this is the law and to overrule KSR v. Teleflex. Given the ayatollah like attitude of some on the Supreme Court that probably wouldn’t be enough. Therefore, I suggest the following changes to 103.
35 U.S.C. 103(a) currently reads:
A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made.
Section 103(a) should be amended to read as follows:
A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. In determining whether the invention would be obvious to one having ordinary skill in the art, prior art references can only be combined if somewhere within the prior art there is a teaching, suggestion or motivation to combine. Patentability shall not be negatived by the manner in which the invention was made, and nothing shall be considered to be within the common sense of the inventor of one having ordinary skill in the art absent a teaching, suggestion or motivation within the prior art.
This would clearly and unambiguously overrule KSR and return to the decades of well established precedent embodying in the teaching, suggestion or motivation rulings of the United States Court of Appeals for the Federal Circuit.
4. Inequitable Conduct
Something needs to be done regarding inequitable conduct, and perhaps that something will be done when the Federal Circuit issues its en banc decision in Therasense v. Becton. The Patent Office changed the rules associated with the duty of candor owed by those substantively involved in the prosecution of a patent application in 1992. After panels of the Federal Circuit initially acquiesced to the change, other panels inexplicably claimed that it was still up to them to decide when inequitable conduct occurred at the Patent Office.
To review, inequitable conduct is also called “fraud on the Patent Office.” The Patent Office under our system of government is allowed to promulgate their own rules and regulations. As long as those rules and regulations are not arbitrary and capricious, and so long as they don’t contravene an Act of Congress, they are upheld and courts are required to provide deference, which means they must follow them. For reasons that have never been fully articulated by some of the Judges of the Federal Circuit they have simply chosen to ignore 37 C.F.R. 1.56, which defines the duty of candor and, therefore, what is and is not inequitable conduct.
I have long suggested that Congress codify 37 C.F.R. 1.56, which would be a fine idea. Perhaps it will be unnecessary after the en banc ruling in Therasense v. Becton, but as history shows us the Federal Circuit law associated with inequitable conduct drifts; it is in fact a moving target. Thus, Congress should act.
The Patent Office is facing an enormous backlog of cases, and the reality is that anything a patent attorney says to an examiner can and will be used later to argue inequitable conduct, no matter how specious the argument. So patent attorneys play a game of hide the ball because that is what is required by the Federal Circuit in order to remove as many possible inequitable conduct arguments as one can. This leads to examination of applications taking longer than necessary. With inequitable conduct reform the Patent Office could and should require more meaningful participation, or at least let those who want to meaningfully participate to move to the front of the line. None of the sensible rules changes that can be envisions have any chance unless and until the law of inequitable conduct is settled. The unfortunate reality is that without Congressional action it won’t be settled even by the en banc ruling in Therasense v. Becton because there will be many patent attorneys who rightly worry about the creeping nature of inequitable conduct rulings at the Federal Circuit.
5. Patent Office Funding
It is absurd that year after year the Patent and Trademark Office, which charges user fees for services and the issuance and maintenance of rights, is not allowed to keep all of the money it collects. This has lead to a decaying Patent Office infrastructure at a time when we need the Patent Office to be issuing patents faster so as to spur investment and create jobs. Thus, Congress needs to stop the ridiculous budget dance it does with the Patent Office and allow the Patent Office to set its own fees and to keep all of the money it collects. Congress has the authority to review agency actions and disapprove, and we know that they have no ability to do much useful in the patent context. That is why giving the Patent Office fee setting authority is critical, and so is letting them keep the funds they collect so they can reinvest in ongoing activities.